HYLA Blog

The Circular Economy: A New Look at an Old Concept

“The goods of today are the resources of tomorrow, but at yesterday’s prices.”—Walter Stahel, Founder of the Product-Life Institute.

This quote perfectly sums up the way we’ve always thought about the secondary mobile device market.

For years, we’ve talked about how the repurposing and proper recycling of mobile devices presents a win-win scenario across the board. Consumers benefit from trade-in value, operators retailers, and OEMs unlock new revenue streams and create customer stickiness, and devices go on to benefit others in second, third, and even fourth lives.

But, more specifically, Stahel’s quote defines the concept behind the circular economy, an idea that’s been featured at the World Economic Forum and has gained increased momentum in recent years.

As the secondary market for mobile devices continues to evolve, we have to keep two questions in mind. What is the circular economy? And how do mobile devices fit into the conversation?

What Is the Circular Economy?

The circular economy is an industrial model that rethinks the centuries-old linear economy.

In the linear economy, production and consumption followed a “take, make, use, dispose” path. Businesses in all industries mined resources and produced goods for consumers who then disposed of those goods. This model applies to both biological and technical goods.

In the circular economy, the focus shifts from disposal to the repurposing of goods. Economic activity is meant to continuously rebuild overall societal health thanks to redesigned production processes.

Circular economy production facilitates reuse and recycling with processes that rethink material selection, component standardization, manufacturing, and separation of materials. The concept breaks down into three key principles:

Design out waste and pollution

Keep products and materials in use

Regenerate natural systems

Each principle contributes to the goal of breaking away from the use of finite resources and towards repurposing that simultaneously boosts economic, natural, and social capital.

This concept can be applied to just about any industry—from renewable energy to automotive manufacturing, farming, and hardware production. And from our point of view, it’s more important than ever to apply the circular economy concepts to the growing secondary mobile device market.

Mobile Devices and the Circular Economy

A study we conducted with Deloitte found that the secondary market for mobile devices is already worth $27 billion and is expected to reach $39 billion by 2025. That’s currently 180 million used smartphones in circulation at an average value of $145. And, we already know that two-thirds of all iPhones ever created are still in use somewhere in the world. That’s an excellent, real-world case of the circular economy in action.

However, there’s still plenty of room to improve. Right now, approximately 96 million devices are unaccounted for as consumers move from old devices to new ones. About 40 million of those devices are handed down to friends, family, or other consumers—a great example of repurposing. But the remaining 56 million end up in drawers on their way, possibly, to a landfill.

When devices waste away in drawers, they lose all value as secondary devices as well as the opportunity to repurpose those devices for use by other consumers. Then, when they’re disposed of improperly, we further lose the opportunity to support the circular economy by extracting precious metals and other materials used to manufacture the devices.

This lost opportunity requires a mindset shift to solve—both on the part of consumers and of businesses in this industry.

Consider how this compares to the process of buying a new car. Consumers don’t park the old car in front of the house “just in case they need it” the way mobile devices are hoarded. No, consumers trade old cars in for value toward the new purchase or lease. That’s the model we need to apply to mobile devices.

The problem is that the secondary market for mobile devices is a complicated ecosystem. It’s one that requires careful management to effectively facilitate a circular economy use case.

Creating these mind shifts require new approaches to product lifecycle management that deliver cost-efficient segmentation of products at various stages, a renewed focus on retail procedures by including trade-in as a part of the process, streamlined reverse logistics, and proper reuse/recycling of materials. It is amazing what a difference it makes to simply ask a customer if they would like to trade-in their old phone and educating them on the economic benefits doing the same. It’s really no different than asking, “Would you like to pay with cash or credit?”

HYLA can help make these changes. We have numerous examples of working with our carrier, retail and OEM partners to revamp their process to enable them to participate in the Circular Economy to create significant economic benefits to their customers as well as to themselves.